DNS - Commtouch Security Platform Boosted by Acquisition

The Command antivirus division of Authentium, Inc., a Florida-based company, which designs software to protect e-commerce by uniting users and websites in an end-to-end secured transaction environment is being acquired by Commtouch (News - Alert).

The definitive Asset Purchase Agreement signed by both parties allows Commtouch to acquire the assets, products, licenses, and operations of the Command antivirus division of Authentium, which also includes technology to protect against spyware, Trojan downloaders and other threats, all of which are strongly synergetic with the Commtouch's product portfolio.

With the addition of antivirus technology as a new, third product line, Commtouch will be offering a comprehensive set of solutions for inbound and outbound messaging and Web security to its customers, which are networking and security vendors and service providers.

Winner of multiple Virus Bulletin Awards, a highly efficient event-processing system, and certified by Checkmark, West coast labs, the Command antivirus division currently provides its technology to a notable number of leading service providers and vendors.

Commtouch is expected to pay $4.6 million in cash and an additional "earnout" contingent upon the achievement of certain revenue milestones through December 31, 2011, which may bring the total amount to approximately $8 million.

The transaction will be financed from Commtouch's own financial resources. At the end of Q2, 2010, Commtouch had approximately $16 million in cash and no debts. Even after paying for the acquisition, the company will still have enough working capital to fund existing operations and explore future ones.

Closing of the acquisition is subject to customary conditions and governmental approvals, and is to take place by September 30, 2010.

The acquisition is expected to help Commtouch to grow in terms of revenue and profits, and should contribute positively to Commtouch's non-GAAP top and bottom line in 2011.

Gideon Mantel, Commtouch's chairman of the board and CEO commented on the expansion of the company's product offerings from a single product line to three complementary product lines, and also on the broadening of the target markets, which now included service providers in addition to the existing OEM vendors.

Mr. Mantel added that Commtouch had considered a number of acquisition opportunities during the past year as part of its long-term growth strategy, and after a thorough examination, had decided that Authentium's Command division was the best fit for our business, both strategically and operationally.

He believed that many of the company's current customers would be eager to consolidate their messaging and Web security needs around a single reliable vendor, Commtouch, and enjoy the operational simplicity and reduced total cost of ownership that it entailed. He also added that they were excited about the opportunities ahead.

Helmuth Freericks, Authentium's chief science officer said that the acquisition posed great opportunities for both the parties, as they had a similar focus on both technological excellence and dedicated customer service.

The acquisition will also provide additional resources in terms of capital, marketing and a renewed focus on enhancing the technology, which would benefit customers and buttress Authentium's commitment to world-class protection.

Mr. Freericks, who also co-founded Command, will join Commtouch's management team as General Manager, Antivirus Solutions. The rest of the Command employees, including its virus lab analysts, will also be joining Commtouch, under Mr. Freericks' leadership.

Commtouch plans to leverage the Command technology and continue developing and enhancing it, by combining the skills and resources of both companies.

The company hosted a conference call to discuss second quarter results and the deal at 10 a.m. Eastern time on Wednesday, July 28, 2010. The call will be available as a replay from the investor relations section of Commtouch's website.

Commtouch provides proven messaging and Web security technology to more than 130 security companies and service providers for integration into their solutions. Commtouch technology automatically analyzes billions of Internet transactions in real-time in its global data centers to identify new threats as they are initiated, protecting e-mail infrastructures and enabling safe, compliant browsing.

In a related news release, Commtouch announced that SUTUS had added Commtouch's Anti-Spam and Zero-Hour Virus Outbreak Protection to its solution. This will protect Business Central customers from viruses and spam in the first minutes of a malware attack, long before anti-virus signatures are available.